SBI Saral Maha Anand | Ulip launched

SBI Life Insurance has launched a low-premium Ulip - Saral Maha Anand.

About the Product:
• The minimum annual premium is Rs 15,000 and the maximum yearly premium is capped at Rs 29,000.
• The sum assured component ranges from 10-20 times of the annual premium and is restricted to a maximum of Rs 7.5 lakh.
• SBI Life Maha Anand is meant for investors in the age group of 18-55 years. The maturity age is up to 65 years.
• Like most other Ulips , policyholders can opt for a yearly, half-yearly, quarterly or monthly payments.
• The product offers customers four investment options depending on their risk profiles: Index, Equity, Balanced and Bond fund.
• It also offers partial withdrawal of up to 15% of the fund value after completion of five years. Investors can use this window to meet emergency liquidity needs.

Charges:
• Premium allocation charge is 6.25% of the premium amount for the first year and it goes down to 3.75% between the second and fifth year, and from thereon, further to 3% until the 10th year of the policy.
• The policy administration charges are Rs 33.33 per month.
• The fund management charges are 1.25% for the index fund and balanced fund, 1.35% for the equity fund and 1% for the bond fund.
Financial advisors say that the cost structure of this regular Ulip is still high despite the flexibility of low premium. Hence, if an investor wants to make the most out of this product, s/he has to invest for the maximum possible term and invest a higher amount to earn decent returns.

Pros:
The low premiums could interest those who are unable to afford the huge premiums payouts in most other Ulips.

Cons:
Though it’s a low-premium product, the charges are not significantly lower than those of the company’s other Ulips.

New ULIP by ING Life Insurance

ING Life Insurance has also launched a new Unit Linked Insurance Product christened ING Prospering Life. This ULIP promises to fulfill wealth accumulation and protection needs of its owners.

This new ULIP comes with a host of customer benefits:
•IT includes 5 fund options to choose from
•Automatic Asset allocation
•Unlimited switches with partial withdrawals free of charge.
•The product offers an annualized premium ranging between Rs 48,000 and Rs 96,000
•Competitive priced against other long term investment options
•The sum assured is an amount 10 times the annual premium at inception for those below the age of 45 & 7 times the annual premium at inception for those above the age of 45.
•The minimum top up premium is Rs 5000.

LIC crosses Rs 1,000 crore score under new ULIP Plans

Country's largest insurer, Life Insurance Corporation (LIC), today said it has crossed the Rs 1,000 crore-mark from its two new unit-linked plans, which were launched after the latest guidelines of the sectoral regulator IRDA took effect last month.

"Life Insurance Corporation of India has crossed the Rs 1,000 crore marks under the new ULIP plans, Pension Plus and Endowment Plus. The total premium income under these two plans as at October 18, 2010 was an awesome Rs 1,282 crore approximately," LIC said in a statement.

The new plans were introduced last month. Pension Plus was launched on September 2 and about Rs 150 crore of premiums have been collected under it from more than 30,000 policies.

Endowment Plus plan was launched on September 20 and it was LIC's 16th linked product. Over Rs 1,000 crore has been garnered from Endowment Plus alone from over 2 lakh policies, in merely 29 days.

As per new guidelines, effective September 1, Insurance Regulatory and Development Authority (IRDA), the commission paid to distributors and expenses charged by insurers will no longer be front-loaded. Instead, they will be distributed over the lock-in period of the schemes, which has been raised to five years from three years earlier.

Currently, ULIP products account for over 50 per cent of the total premium collected by the life insurance companies.

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The new and improved ULIPs are here to stay

IT is after a long time that all the insurance companies have started offering unit-linked insurance plans (Ulips) that meet the new guidelines of the Insurance Regulatory and Development Authority (Irda).
All the players, namely –
• Future Generali
• Kotak Life Insurance
• SBI Life Insurance
• Reliance Life Insurance
• HDFC Standard Life
• LIC and soon
Have launched and continue to launch their products in line with the new norms that came into effect.
Irda has cleared 51 of the 68 unit-linked products that were filed with it. Each insurer has to come out with a minimum of two products.

New ULIP norms – What it means?

Nearly three-quarters of the 1.6 million private life insurers have had trouble in business. Insurers are taking steps to cut costs in the wake of a dramatic reduction in charges of unit-linked insurance policies (or Ulips) by the insurance regulator, IRDA. The new norms, may push 1.2 million agents out of work, took effect from 1 September.
Ulips are: A hybrid product that combines insurance and equity investment.
They account for at least 80% of new business premiums for life insurers. The size of the agency channel, which sells policies of 23 life insurers, has grown from 900,000 to about three million since 2000. Until recently, agents were aggressively pushing sales of Ulips, earning commissions of up to 40%!
The state-run, Life Insurance Corp. of India (or LIC), alone manages at least 1.3 million agents. There are about 310 million policies in force, including traditional life insurance policies.
The insurance regulator has capped various charges including surrender charges. Till 31st August, companies were able to levy up to 100% as surrender charges from a customer if a policy was discontinued.
The regulator has also ordered insurers to offer a minimum guaranteed return of 4.5% on the fund value in linked pension plans. Earlier, there was no such norm and the value of the funds invested entirely depended on the yield of the instruments where the premium was allocated.
The new norms will benefit policyholders but will bring down average agent commissions in Ulips from 15-17% to 7-9%. The reduction in the first-year agent commissions will help curb rampant mis-selling, insurance firms will be required to underwrite more losses, infuse more capital and cut costs to sustain Ulip sales.
LIC may not need to resort to cost-cutting measures due to its highly profitable business, but private sector insurers are planning drastic cost-cutting measures to sustain their businesses in the new regime.
What measures companies can take?
• Cutting the agency channel is one of several cost-cutting measures.
• The firms plan to cross-sell products through branches of associate companies instead of opening new branches,
• Cut commission of agents retained
• Redesign new products with variable premium.
• The companies are also focusing on alternative distribution channels such as subancassurance, where the expenses are lower. According to industry estimates, the cost of sales through bank branches or bancassurance can be as low as 20% of the value of the policies sold.
• To save costs, private players are also focusing on training facilities to improve agents’ productivity.
• Some bank-owned life insurers are planning to sell insurance policies through the branches of their mutual fund subsidiaries.
Statistical analysis:
According to a recent study, existing distribution channels are almost entirely focused on Ulips. Nearly 85% of new business premium comes from sales of Ulips but the cost of sales through agency channels is very high—between 50% and 100%.
The study said the cost should be brought down to 25-30%. It also revealed that nearly 60% of the agents work part-time.
India’s life insurance industry has grown some eightfold in the past ten years, collecting a total premium income of Rs2.61 trillion in 2009-10, or which nearly Rs1.1 trillion came from Ulips. At least 310 million life policies are in force now.
The regulator has so far cleared 51 of 68 new Ulips filed by insurers. There were 230 Ulips in the market till August.

Reliance Life Insurance launched highest NAV advantage ULIP

Reliance Life Insurance Company (RLIC), part of Reliance Capital promoted by Anil Ambani , Tuesday announced the launch of a new unit linked insurance plan (ULIP).

The Reliance Life Insurance Highest NAV Advantage Plan offers guarantee on maturity with the highest Net Asset Value (NAV) per unit achieved throughout the entire 15-year policy term.

"Our new unit-linked plan fulfils the diverse needs of customers across different segments while addressing their need for long-term wealth-creation and increased life protection," said Malay Ghosh, executive director and president, RLIC.

This is the first ULIP launched by Reliance Life after the insurance regulator, Insurance Regulatory and Development Authority, came out with revised guidelines a few months ago.

The plan pays the beneficiary twice the sum assured plus total fund value in the event of accidental death for the base cover portion. The unique plan also offers the benefit of up to 100(%) per cent equity exposure throughout the policy period.

The plan, which is available for customers in the age group of 7-65 years, also provides liquidity through partial withdrawals after 5th policy anniversary and loan after the completion of second policy year and top-up option to the policyholder.

It is available under two minimum payment options. The regular option allows customers to pay Rs.20, 000 annually, half yearly, monthly and quarterly. In the single premium option, the customer pays a minimum of Rs.50, 000 only once at the beginning of the policy tenure.

SBI Life Insurance launches new ULIP product Saral Maha Anand

SBI Life Insurance has launched a new unit-linked insurance plan (ULIP) called Saral Maha Anand.

This is the third ULIP product launched by the insurer since the introduction of the new ULIP norms by the insurance sector regulator, IRDA, last September.

The two products launched by SBI Life are
1.Smart Performer and
2.Unit plus Super.

Saral Maha Anand, its new ULIP product:
• Is available at an affordable yearly premium starting from Rs 15,000 onwards and
• The product has been designed to cater to investment and protection needs of the middle-and-low-income segments.
• The product is exempted from medical-examination.

To quote SBI Life Insurance's managing director & CEO, MN Rao,
"The product offers simplicity and affordability so that a larger section of society can participate and benefit by systematically investing over a long-term horizon."

ULIPs turn costly for investors yet GOOD Investment

Unit-linked insurance plans have become just a bit expensive post 1st September 2010 retail investors. This is because of structural change brought about by the Insurance Regulatory Development Authority's (IRDA) new norms.
Most of the newly launched products offer only an annual premium mode (unlike the monthly payment option earlier) and moreover, the minimum premium payable for such policies now start at Rs 15,000 — an increase of Rs 5,000 from the past.
The few insurance companies that offer the ‘monthly premium' option have now raised the minimum commitment to Rs 2,000 — turning into a premium of Rs 24,000 a year. The new ULIPs launched by insurers such as ICICI Pru Life, HDFC Standard Life, Max New York Life, LIC and Kotak set their annual premium in the range of Rs 15,000-20,000, and Canara HSBC OBC Insurance and Birla Sun Life, have a starting premium of Rs 25,000/annum.
The monthly mode offered by SBI Life and Birla Sun Life comes at a higher premium of Rs 2,000-2,500 a month, taking the annual premium outgo to Rs 24,000 and Rs 30,000, respectively. One of objectives of the new IRDA regulation was to enhance retail participation and make ULIPs more transparent and cost-effective.
Insurance companies believe that under the revised norms, marketing ULIP will be profitable, only if policyholders continue to pay premium over the policy's 10-year or longer term. Investors are more likely to keep their policies in force if premium are collected on an annual basis, compared with a shorter time-frame.
Insurance company personnel said that the charges an insurer can levy are capped through minimum return criteria laid down by the IRDA, which makes it difficult for the insurance company to absorb customer acquisition costs at a lower premium.

Norms could cap charges on top of ULPs, Irda

The Insurance Regulatory & Development Authority (Irda) is planning to cap the charges on universal life policies, or ULPs. These have almost replaced unit-linked insurance plans (Ulips) in terms of new business. Ulips, which used to account for around 80(%) per cent of the segment, lost their shine after the regulator brought in tough norms from September 1.

“We are planning to cap the charges on ULPs, which are parallel to Ulips and have a component of traditional plans. We have received complaints from different sections of the industry claiming that some companies are selling them as Ulips and overcharging policyholders. We want to plug all loopholes,” said a senior Irda official.

Guidelines on ULPs will be in place by next week, the Irda official added. J Hari Narayan, chairman of Irda, had conveyed last week that every product would be experienced for fairness and robustness and only then would they be permitted on the market.
According to present guidelines, commissions on a single premium are capped at 2(%) per cent. On pension products, they are capped at 7.5(%) per cent, while on any other insurance product they can go up to 40(%) per cent.
After the September 1 changes to Ulips, commissions to agents declined to 7-9(%) per cent from 12-15(%) per cent. The industry expects volumes to pick up, as the new norms improve policyholders’ confidence.
So far, there have been no separate guidelines for ULPs, which are complex, hybrid products. For example, unlike Ulips, there is no unitisation of funds. But other features are similar to Ulips. For instance, after the deduction of mortality charges, the remaining portion of the premium amount is invested in bonds and equities.
ULPs are unique in the sense that policyholders have the flexibility to change the premium, sum assured and the term of the policy during the tenure.
“Irda has not cleared any ULPs in the last 3-4 months. The product is under Irda’s scanner. Agents are pushing them to earn a high commission,” said Sanjiv Pujari, an actuary appointed by SBI Life.
Another executive expects the regulator to come down hard on this product. “There have been complaints about ULPs being sold under the guise of Ulips,” he said.
But there are some who defend ULPs. “There is no need for separate guidelines for universal life. This is not a very difficult product. We don’t disclose the net asset value like Ulips, but the expenses are explained upfront,” said a chief executive officer of a life insurance company.
He added that insurance companies have been selling the products before Ulips were launched in India and have been following the traditional guidelines.
The mutual fund industry, after shifting to a zero-load structure last year, complained that agents and brokers pushed only Ulips because of the high commissions. Soon after, Irda capped the overall charges on these products. To avoid such a situation, the regulator has decided to address the issue proactively.
Also, a committee headed by D Swarup, former chairman of the Pension Fund Regulatory & Development Authority, had recommended shifting to a no-load structure, where a buyer does not pay a commission on any financial product.

Unit-linked insurance plans roll expensive for investors

Unit-linked insurance plans have become just that bit more difficult to access for retail investors.
This follows the recent changes made to the premium configuration of policies launched by some insurance companies. Since September 1, the date when ULIPs were believed to comply with the Insurance Regulatory Development Authority's new norms on such policies, most of the recently launched products offer only an annual premium mode (unlike the monthly payment option earlier) and moreover, the minimum premium payable for such policies now start at Rs 15,000 — an increase of Rs 5,000 from the past.
Even the few insurance companies that offer the ‘monthly premium' option have now raised the minimum commitment to Rs 2,000 — translating into a premium of Rs 24,000 a year. The new ULIPs launched by insurers such as ICICI Pru Life, HDFC Standard Life, Max New York Life, LIC and Kotak set their annual premium in the series of Rs 15,000-20,000, and Canara HSBC OBC Insurance and Birla Sun Life, have a starting premium of Rs 25,000/annum.
The monthly method offered by SBI Life and Birla Sun Life comes at a higher premium of Rs 2,000-2,500 a month, taking the annual premium outgo to Rs 24,000 and Rs 30,000, respectively. One of objectives of the new IRDA regulation was to enhance retail sharing and make ULIPs more transparent and cost-effective.
Insurance companies reason that under the revised norms, they will finds ULIP marketing money-making, only if policyholders continue to pay premium over the policy's 10-year or longer term. Investors are more likely to keep their policies in force if premium are collected on an annual basis, compared with a shorter time-frame.
According to an industry insider, the regulator's insistence that policyholders must not suffer more than 3(%) percentage points as fees out of the gross returns posted by the insurance company, is already a constraint on the latter's ability to defray the customer acquisition cost ( marketing expenses). The additional stipulation that cancellation charges (for premature termination) can not exceed 4(%) per cent of the premium paid, means that initial acquisition costs can be defrayed in full only if the size of the annual premium collected from the policyholders up to that point of time are larger than earlier. Hence, the industry's emphasis on a larger ticket size for the annual premium.
A top official of an insurance company said that the charges an insurer can levy are capped through minimum return criteria laid down by the IRDA. This makes it difficult for the insurance company to attract customer acquisition costs at a lower premium.

ULIP review: Bajaj Allianz Life Insurance

Single-premium unit-linked insurance products are accepted among investors due to the convenience and less fears. However, the new Ulip period has seen very few such products.

The Wealth Insurance Plan from Bajaj Allianz Insurance Company is one among the few new products. This is a single-premium whole life unit-linked insurance policy. It is a vanilla product, with the maturity age fixed at 75 years.

The insurance plan offers an inclusive basket of investment options (funds), with varied proportion of equity and debt, for one to choose from as per the risk and return appetite. For instance, the equity growth, pure stock and accelerator mid-cap options are equity-based, whereas liquid and bond funds are debt-based.

Those looking for a balanced portfolio can opt for the asset allocation fund. This plan also offers an index fund option for those who want returns that mirror the stock market.

ING Life Launched Uttam Jeevan and Uttam Jeevan SP

ING Life India has launched two new customer-centric unit linked insurance products - ING Uttam Jeevan and its single premium variant, ING Uttam Jeevan SP, are in accordance with the new IRDA guidelines.

Both the products have been designed to fulfill customers need for investment and protection. These are simple products, which will appeal to all customers, especially those who are new to ULIP. They are easy to understand and buy.

Features:
• The minimum annual premium for Uttam Jeevan is Rs 24,000, while that of Uttam Jeevan SP is Rs 48,000.
• As they are non-medical insurance products, they are hassle free and easy to buy.
• The products enable a higher allocation of premium for investments, thus getting better returns.
• The product offers customers an automatic increase of 5 % in the base sum assured year-on-year, thus keeping up with the increased financial responsibility with age of the customer. It also has in-built accidental death benefit. The death benefit is Sum Assured + Fund Value.
• The products offer flexibility to customers with charge free withdrawals as well as top ups.
• In case the policy lapses, customers can reinstate the policy within 45 days from the date of lapse free of charge.
• Customers also have the benefit of increasing their contribution by way of Top-Up, with a minimum top-up premium of Rs. 2,000.
• Four free switches are allowed every policy year, helping customer to manage their investments well.